The price of Coinbase (COIN) and Silvergate Capital Corporation (SI) have decreased by more than 90% since their respective all-time highs. The steep downtrend became worse in Nov. 2021, after the FTX exchange imploded.
With such significant losses incurred, is it time to pick up these stocks as they trade at a discount? Or is it time to continue to wait on the sidelines for a better entry?
Silvergate Crashes After FTX Fiasco
Silvergate Capital Corporation stock price has fallen by 92.5% since its all-time high of $239 in Nov. 2021. The rate of decrease further accelerated in Nov. 2022, likely as a result of the FTX collapse.
The parent company of Silvergate Bank is one of the biggest crypto lenders that was affected by the FTX fiasco. Still, CEO Alan Lane stated that customer funds are safe despite the exposure to FTX and BlockFi.
Lane stated that FTX represented only 10% of Silvergate’s total deposits of $11.9 billion from digital asset customers. Despite the significant blow, Morgan Stanley has not downgraded the rating of Silvergate’s shares. A possible reason for this is that any testimony from FTX could have a negative effect on the shares of Silvergate.
Technical analysis readings state that there are no bullish reversal signs in place yet for the SI stock. While the weekly RSI is oversold, it has not yet generated bullish divergence.
It is worth mentioning that there is a long-term support area at $16, which had previously acted as resistance for nearly a year in 2020. It is possible that the SI price will bounce once it gets there.
Coinbase Drops to New All-Time Low
Coinbase is one of the largest crypto exchanges in the world. COIN shares price has fallen more than 91% since its IPO in April 2021. This has led to a new all-time low of $38.50, recently. Interestingly, the downward movement has followed a descending resistance trendline.
Despite the sharp drop, there are bullish signs in the form of bullish divergence in the weekly RSI (green line). The divergence has developed since May 2022.
If Coinbase stock successfully initiates a reversal, it could cause a sharp upward movement. A breakout from the resistance trendline, which currently hovers around $50, would confirm that the reversal has begun.
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